I'm guessing this is a WONTFIX because determining when there's a link inside a link seems like a complicated problem. @Pastakhov can say more about this.

You do use grammar categories. For example, you can recognize template inside template. Try

{{A|B|{{PAGENAME}}|C}}

@Niharika no, it is not a complicated problem. Just Files contain several different parameters (not only the caption) and it takes a time to write code to cover all them. I will fix it.

@IKhitron the ticket about Files with links in caption, I do not understand the text you wrote above, please, try to rephrase or specify more details

I know, that it is about files. Wgat I wrote is this: the tool is able to recognize construct within construct (as template within template as I mentioned above), so it should be much easier to recognize inner link within inner link for fikes.

@IKhitron the problem is not the same like a template inside a template and solution will be different.
Files have their own syntax and I just skipped this part of code (I had no time)

@Pastakhov Are you still working on this?

@Niharika I'm on a trip until September

@Pastakhov Are you still working on this?

Oh, sorry. I got hard busy... I hope to continue in 2-3 weeks :-/

Visual example: